While following a recent circular issued by the Central Board of Direct Taxes (CBDT), the Income Tax Appellate Tribunal (ITAT) held that no tax is required to be deducted on passenger service fee (PSF) collected by the Airport authorities. The bench clarified that the said amount cannot be termed as “rent” for the purpose of section 194I of the Income Tax Act, 1961.
In the instant case, the Assessing Officer treated M/s Jet Lite (India) Ltd, as an assessee-in-default on ground of failure to deduct tax at source on passenger service fee. The A.O. held that the afore-stated payments were liable for deduction of tax at source u/s 194I of the Act.
Assessee relied on the decision of the Tribunal in its own case wherein tribunal held that PSF charges are not subject to deduction of tax at source u/s 194I of the 1961 Act. it was contended that the appeal filed by the Revenue against said decision of the tribunal in the said case stood dismissed by the Bombay High Court.
Further, it was pointed out that the CBDT has also recently come out with circular no. 21/2017 dated 12-06-2017 wherein CBDT accepted the position that section 194I is not applicable on PSF charges in the light of the above decision.
In view of the above, the bench ruled that “the payment of passenger service fees (PSF) paid by the assessee is not subject to deductibility of tax at source within the meaning of section 194-I of the Income Tax Act.”
Read the full text of the Order below.
